The Podium

Bret Swanson of Entropy Economics (and one of our Broadband Ambassadors) has put together a new study for the American Enterprise Institute showing that despite claims from those who wish for the government to heavily regulate broadband providers, the U.S. broadband market is actually quite healthy. The full study is definitely worth digging into, but below are some of Swanson’s key points:

• Internet traffic volume is an important indicator of broadband health, as it encapsulates and distills the most important broadband factors, such as access, coverage, speed, price, and content availability.

• US Internet traffic is two to three times higher than that of most advanced nations, and the United States generates more Internet traffic per capita and per Internet user than any major nation except for South Korea.

• The US model of broadband investment and innovation—which operates in an environment that is largely free from government interference—has been a dramatic success.

• Overturning this successful policy by imposing heavy regulation on the Internet puts one of America’s most vital industries at risk.

Expanding consumer options and preferences has forever broken down traditional standalone wire line, wireless, cable and broadcast services. According to Kovacs, 89% of households subscribed to wireless voice by the end of 2013, either by itself or in combination with some supplemental type of wired voice service.

Additionally, 29% of consumers prefer the blend of wireless service with plain old telephone service (with voice capabilities) and 22% with voice over internet protocol. Those figures are corroborated by a recent Pew Research Center study, which shows that as of 2013, 70% of adults had fixed-broadband access from home, a number that rises to 80% when access via smartphone is included. And most notable, are the 38% of consumers who rely solely on wireless.

Given this data it is clear many households are combining some form of fixed broadband (including some forms of fixed wireless) with mobile wireless broadband. All of this underscores the need for a new regulatory network framework based on the recognition of the diversity of consumers and the various choices they have today in a 21st century broadband world.

84%, which is how much Internet traffic Cisco expects to be video in four years. As Marina Lopes of Reuters reports:

Video consumption of the World Cup alone will generate nearly as much Internet traffic as occurred in all of Australia in 2013, according to a new Cisco Systems Inc report that shows growth in Internet traffic is fueled by video.

The report, which says video is expected to grow to 84 percent of Internet traffic in the United States by 2018 from 78 percent currently, raises questions about whether Internet service providers should prioritize traffic, which has become a controversial issue.

“In the future at some point every month is going to look like the world cup month because the consumption just keeps getting bigger and bigger,” said Robert Pepper, Cisco’s vice president of global technology policy.

Often forgotten in the great net neutrality debate is the fact that bandwidth-intensive video is the future of the Internet. And that presents some very real engineering challenges.

Next week, one of the biggest video games of the year, Titanfall, will be released. Except, as it turns out, in South America. As Kyle Orland of Ars Technica reports:

When Titanfall finally sees its worldwide release next week, South Africa will not be among the countries to get a version of the game. Early this morning, EA South Africa announced via Facebook that it has decided to hold off on a local release after poor Internet performance during the game’s recent beta test. South Africa’s Gamezone reports that local preorders are being canceled both by Origin and area brick-and-mortar retailers.

“After conducting recent online tests for Titanfall, we found that the performance rates in South Africa were not as high as we need to guarantee a great experience, so we have decided not to release Titanfall in South Africa at this time,” the post reads. “We understand this is a disappointment for local fans and will keep fans posted on any future plans regarding the release of Titanfall in South Africa.”

Interestingly, the video game’s online servers are powered by Microsoft’s cloud service, Azure, and the closest data center to South Africa is in Brazil. While missing out on a video game is no big deal in the grand scheme of things (unless you were excited to play it), Titanfall‘s absence in South Africa highlights the challenges involved in building an international product that is dependent on a robust Internet infrastructure.

There’s nothing like a little international competition to motivate action. Take Sputnik. Or JKF’s “missile gap.” Or Finland’s recent schooling of the time-to-watch-from-the-sidelines Olympic hockey team.

The battle over global broadband offers a prime example, Washington-style. Many broadband boosters here in our nation’s capital lament a Bandwidth Gap with other nations, including many in the European Union. Some have even suggested that Europe offers the best model for future American broadband policy.

It is worth observing, however, that many European experts disagree. For example, in September European Commissioner for the Digital Agenda Neelie Kroes lamented:

The world envied Europe as we pioneered the global mobile industry in the early 1990s (GSM), but our industry often has no home market to sell to (for example, 4G). Consumers miss out on latest improvements or their devices lack the networks needed to be enjoyed fully. These problems hurt all sectors and rob Europe of jobs it badly needs. EU companies are not global internet players… 4G/LTE reaches only 26% of the European population. In the US one company alone (Verizon) reaches 90%!”

This Battle of the Bandwidth is nicely highlighted in a new report from AEI’s Roslyn Layton that focuses on the important contrasts between European and American broadband policy. Those differences are profound, focusing on incentives for private investment. Only 2% of European households subscribe to Internet services offering connections faster than 100Mbps, according to the EU’s 2013 Digital Agenda Scoreboard. While Europe’s share of broadband investment is less than 20%, the U.S. attracts 25% with a smaller population — per capita investment here is double that in Europe. The EU estimates that it faces a shortfall of €110–170 billion ($150–230 billion) by 2020 if it is to reach its connectivity goals.

In America that money is being put to work, most aggressively by those facing the least legacy regulation, such as IP networks, cable networks and wireless. Such light-touch regulation has fueled robust intermodal competition in the development and deployment of next-generation broadband networks to satisfy a seemingly bottomless consumer appetite.

Those who criticize the state of broadband in our nation typically focus only on one technology, fiber to the home, and choose to ignore the vibrant intermodal competition — such as cable, wireless — that has delivered cutting edge broadband services that are available to millions of Americans, yet largely unavailable to Europeans.

Some criticize America’s delivery broadband service in comparison to the Nordic countries in Europe. Yet, a closer look reveals that the successes in these countries may actually be a result of having policies that look similar to the policies here at home. As Layton notes, Denmark, a country with high broadband penetration, has demonstrated two keys for success:

1. Technological agnosticism. No one broadband technology is favored over another.

2. Market-led broadband development. The government does not decide which technology citizens should have, nor does it give government subsidies for broadband deployment.

Layton’s right. It’s time to put the “Europe is better” argument to rest. Ultra-fast broadband for everyone sustained and serious levels of investment, enabled by policies that promote investment and competition.

Comcast Corporation (Nasdaq: CMCSA, CMCSK) and Time Warner Cable (NYSE: TWC) today announced that their Boards of Directors have approved a definitive agreement for Time Warner Cable to merge with Comcast. The agreement is a friendly, stock-for-stock transaction in which Comcast will acquire 100 percent of Time Warner Cable’s 284.9 million shares outstanding for shares of CMCSA amounting to approximately $45.2 billion in equity value. Each Time Warner Cable share will be exchanged for 2.875 shares of CMCSA, equal to Time Warner Cable shareholders owning approximately 23 percent of Comcast’s common stock, with a value to Time Warner Cable shareholders of approximately $158.82 per share based on the last closing price of Comcast shares. The transaction will generate approximately $1.5 billion in operating efficiencies and will be accretive to Comcast’s free cash flow per share while preserving balance sheet strength. The merger will also be tax free to Time Warner Cable shareholders.

This transaction will create a leading technology and innovation company, differentiated by its ability to deliver ground-breaking products on a superior network while leveraging a national platform to create operating efficiencies and economies of scale.

Comcast and Time Warner Cable are the two biggest cable providers in America, so of course this proposed deal is going to receive heavy scrutiny. As The Hill‘s Kate Tummarello writes:

The deal would bring Comcast’s total number of subscribers to 30 million, with the company gaining 8 million subscribers from Time Warner. But as a part of the deal, Comcast also agreed to sell off systems that serve 3 million subscribers.
Top antitrust lawmakers vowed to examine the acquisition closely.

In a statement, Sens. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah) — chairwoman and ranking member of the Senate Commerce’s Subcommittee on Antitrust — said they will hold a hearing on the proposed merger.

“This proposed merger could have a significant impact on the cable industry and affect consumers across the country,” Klobuchar said, adding that she will “carefully scrutinize the details of this merger and its potential consequences for both consumers and competition.”

This is going to be a long regulatory battle, so buckle up. The full Comcast statement about the deal is here.

Last night, President Obama delivered his sixth State of the Union Address. One highlight from his speech was a renewed pledge to connect every school in America with high-speed Internet. As Kevin Fitchard of GigaOm reports:

Last year, Obama announced a program to extend broadband access to 99 percent of schools over four years, and on Tuesday he said the administration is working with the Federal Communications Commission, Verizon, Sprint, Apple and Microsoft to fund such a project. According to the White House, details of these “philanthropic partnerships” will be released in coming weeks and will help connect 15,000 schools and 20 million students with wireless and wireline broadband in the next two years.

FCC Chairman Tom Wheeler said that the commission has made a point to make the program as efficient as possible.

“By applying business-like management practices to E-Rate, we can take steps this year that will make existing funds go farther to significantly increase our investment in high-speed broadband connectivity for schools and libraries for the benefit of our students and teachers,” he said in a statement after Obama’s remarks.

“In the Internet age, every student in America should have access to state-of-the-art educational tools, which are increasingly interactive, individualized and bandwidth-intensive,” Wheeler added.

The problem is, the article failed to do justice to the success of U.S. broadband providers in serving customers. It was also misleading in its use of Riga and Seoul as the standard for broadband measurement; the article could as easily have cited Kansas City, with its 1 gigabit speeds, and found the rest of the world to be inadequate in comparison.

Here’s a better gauge of broadband deployment: The National Telecommunications and Information Administration reports that the U.S., despite its vast geography and dispersed cities, has higher average speeds and lower prices than Europe generally. In fact, entry-level broadband pricing in the U.S. is the second lowest globally, behind Israel, according to the International Telecommunications Union.

I wasn’t the only one baffled by the Times’ approach. At this morning’s AEI Tech Policy Summit, Roslyn Layton, Ph.D. of the Center for Communications, Media and Information Technologies — who also lives in Denmark — tackled the Times’ article directly, telling attendees, “I always hear that everything is better in Europe… there are pockets of next-generation service, but it’s hardly a ‘utopia.’”

Layton also highlighted the fact that U.S. broadband investment is two times greater than investment in the European Union, and that, as she put it, “The U.S. is getting one quarter of all the money being invested in broadband networks across the world.”

That’s a lot of investment, and as a result of all that private money flowing into networks, America now has both fixed and wireless broadband systems that are fast, robust, and affordable – all thanks to a light-touch regulatory framework that encouraged some $1.2 trillion in investment since 1996, with billions more expected as more spectrum is made available for wireless broadband. In contrast, Europe’s highly-regulatory, leased access regime has limited broadband infrastructure investment and slowed deployment of next-generation networks.

Riga and Seoul may have faster speeds, but when it comes to deployment of broadband, they’re anomalies rather than benchmarks. Contrary to the inference in the Times’ article, the U.S., with its pro-investment regulatory policy, has eclipsed all of Europe in both network speed and affordability. That’s not a struggle, it’s a success.

American innovation has led to massive adoption of cutting-edge communications and entertainment technologies. Functionalities and services once wondrous and new are now commonplace. A step back reveals how far and how fast we’ve come. In 2000, television changed forever as TiVO introduced us to time shifting, the ability for consumers to record and watch TV programs at the scheduled hour of their choosing. That same year, our Internet and telephone experience was enhanced as cable modems began to take hold in American homes. The following year, we saw the first iPod, and how we buy, store, and listen to music has never been the same. The iPhone (2007) and iPad (2010) gave birth to a revolution in the use of mobile data.

Unseen but ever-present wired and wireless broadband networks provide the foundation for the high-quality video, voice and Internet services that Americans have welcomed with historic enthusiasm, as they have been adopted by in the home and mobile users at a stunning pace.

During the past decade, under our feet and above our heads, the nation’s broadband service providers have invested tens of billions of dollars to bring high-speed wired and wireless connections to our homes and businesses and in the process have reshaped almost everything about how we communicate. Because of these investments, we constantly have available a seamless stream of voice, data, and video on demand.

Today’s digital networks offer boundless opportunity—boosting economic growth and job creation; through remote monitoring and telemedicine, bringing world-class medical care to remote communities and easing the burden of chronic conditions; improving education for students of all ages by delivering advanced coursework, college classes, and even online degrees through distance-learning programs; maintaining constant communications with business associates, family and friends; and providing entertainment and real-time news, weather, and sports information.

This enhanced connectivity also enables civic empowerment—especially for groups who haven’t always been heard—enabling them to communicate more easily with elected officials and to organize and advocate on their own behalf.

Achieving the next level of broadband investment and enabling faster connections, more capable services and deeper Internet penetration in hard-to-serve areas will be facilitated by policy changes by the FCC. With the commission’s newly arrived leadership, these needed changes should be at the forefront of the agency’s agenda.

While communications of all kinds have rapidly moved to the Internet and broadband networks, the aging copper-wire, circuit-switched telephone network remains in place, using the same technology Alexander Graham Bell pioneered. It offers plain old telephone service (POTS), and Americans are fleeing it in droves at an ever-accelerating pace. Only 5 percent of Americans use the old network as their exclusive communications medium. Another 38 percent use it in combination with wireless service, and most Americans use wireless communications only or rely on a combination of wireless and a wired alternative to the telephone network, such as cable modem service.

We stand at an inflection point where the rules that were sensible in the last century for a heavily regulated circuit-switched telephone monopoly are no longer sensible in today’s competitive communications landscape dominated by broadband and a multiplicity of Internet-enabled services. The requirement of current law that telephone companies spend billions annually maintaining a single-function, aging network that consumers no longer prefer is impeding the next level of broadband investment. Planning and delivering a rapid transition to an all-broadband communications environment is the greatest challenge that the new FCC chairman faces.

A Change Requiring New Policy

In its time, the phone network was a culture-changing technical marvel that introduced nationwide communication through copper wire, erasing geography and reliably enabling Americans to dial business contacts, friends, family, and neighbors anytime, anywhere.

During the early and mid-20th century, access to telephones grew rapidly as government aided and promoted a monopoly to accelerate network build-out to reach all Americans. As telephone service became nearly ubiquitous in the latter half of the last century, technological and market advancements created the possibility for alternative satellite, wireless, and landline communications for businesses and consumers.

Realizing the potential benefits that the array of digital technologies could provide, the U.S. government ended the phone monopoly, and with passage of the Telecommunications Act of 1996, began to chart a course toward more robust competition and entrepreneurship in the nation’s communications marketplace. Consumers were first offered choice in the long distance telephone market. Then new providers, such as cable companies, built out broadband networks to offer competitive wired residential telephone and Internet services. The door was opened for telephone companies to offer cable TV service, and digital networks were developed that could accommodate it.

As the reliability of wireless communications increased and access to broadband services has expanded, American consumers at work and in the home have embraced them with a passion. Modern broadband communications systems now link us to the Internet; move information, data and video at lightning speed; and carry our voice “phone” calls, too. These are the networks consumers prefer, and the transition away from the antiquated telephone network is occurring with remarkable speed. As society now treasures its smartphones and tablet devices, streaming videos, GPS guidance systems, and other electronic wonders, we forget that little more than a decade ago personal communications was still largely about POTS. Current law still assumes that most communications are delivered by the POTS network.

Existing regulations were created in a world where heavily regulated phone companies provided copper wire voice service, lightly-regulated cable companies delivered TV, and wireless companies offered services deemed too unreliable to compete with wired telephone service. In fact, these rules still compel telephone companies to invest nearly $13.5 billion each year to maintain and run the old copper phone system as if it were still the nation’s core communications system used by almost all.

Too Much Investment to Maintain Old Technology

As the number of telephone company subscribers on POTS sharply falls, the per-subscriber cost of maintaining the old network has become unsustainable. According to a recent study, America’s telephone companies made more than $154 billion in capital expenditures from 2006 to 2011. Surprisingly, the majority of that investment was dedicated to maintaining the declining telephone network, even though today only about one-third of Americans still use it at all, and only 5 percent use it exclusively. Every dollar that is spent maintaining a voice-only network that consumers are fleeing is a dollar not invested in the modern multifunction broadband networks that consumers prefer. Every dollar telephone companies spend on an ancient, declining, and little used technology is a dollar not spent developing the more capable broadband infrastructures through which phone companies can become stronger competitors in the offering of voice, video, and data with largely unregulated cable companies. That’s an important goal because when competition is fair and fierce, consumers ultimately win big with competitive pricing and greater choices to fit their personal needs.

Ancient rules and old ways of thinking are undermining innovation, damaging competition, forcing billions of dollars into misdirected capital investment, and slowing our national progress. Maintaining the status quo for the antiquated telephone network—either by decision or inaction—is a costly anachronism. Requiring phone companies to operate voice-only telephone networks while they are building out new fiber-optic broadband networks makes as much sense as requiring a hitching post in front of every store, forcing bus companies to maintain streetcar tracks, or insisting on backup electric fans in every air-conditioned building.

The IP Transition: Six Principles to Consider

The FCC’s 2010 National Broadband Plan is instructive. It observes that the regulations requiring telephone companies to maintain the old phone network “siphon[s] investments from new networks and services” and is “not sustainable.” The report also declares that the transition to “broadband is the greatest infrastructure challenge of the 21st century.” The FCC’s Technological Advisory Council recommended that the transition and sunset of the POTS network be completed by 2018.

That’s not very far away, and meeting that schedule will bring its own unique challenges. Consumers must be protected, and certain populations are at risk of being disadvantaged. Of particular concern are those who are not yet taking advantage of the opportunities created by new digital technologies. For example, late adopters—largely older and less affluent consumers, many of whom reside in hard-to-serve rural areas, who have not yet joined the broadband era—may be at greater risk unless we complete the transition in a carefully planned and orderly way. The transition to 21st century communications networks must serve every American. But that result is not pre-ordained; it will require hard work.

Government must play a key role throughout this process by advancing consumer interests with a transition plan guided by core principles. These basic protections will remain government’s responsibility even after the old phone system is shut down:

1. The commitment to universal service must endure. Next-generation high-speed broadband networks and their benefits must be available to every American. As we move beyond the old phone network, we cannot leave anybody behind. Without dictating specific technologies or micro-managing how communications competitors meet their public service obligations, we must push the envelope to ensure that every American can access modern broadband service and enjoy the benefits that come with it. At a minimum, post transition everybody should enjoy service at least as good as they can now receive from copper-wire phone networks.

2. Public safety must be assured. 911 emergency calls must go through—every single time—no matter what technology or services consumers adopt.

3. Services for the hearing-impaired and those with vision problems also must be retained at levels that at least match what consumers enjoy today.

4. Consumer protection must remain at the heart of communications policy. Consumers must know that government has their back; that service providers will deliver on their promises; that spotty service, fraud, or other abuses will not be tolerated. Consumers must have a place to take complaints with confidence that something will be done about them.

5. Establishing a backup plan for power failures should be part of the transition process. The rebuilding after Hurricane Sandy exposed some potential weaknesses in the way our digital technology works today. While fiber-optic-based systems tolerate water damage that can short out copper wires, they are more vulnerable when the electricity at the user’s premises goes out.

6. Special retrofitting and other creative solutions may be required to ensure that modern networks function fully with personal and business equipment such as fax machines, security systems, health monitors, and credit card readers, even though they may not currently be compatible with today’s broadband connections.

FCC Should Begin Trials Now

Consumer interests are paramount. These core challenges must be met before the book is closed on the antiquated POTS network. Contrary to the claims of some, the post-transition environment will not be regulation free. Indeed, regulation will be necessary to assure consumer protection, but just as networks are modernizing, the regulatory landscape must be modernized as well.

What’s needed is smart regulation appropriate to protect consumers and public safety, promote competition and support universal service, while also encouraging sustained private investment and innovation in America’s next-generation communications networks.

The upgrade and modernization effort will require thought and planning. That’s why we must start now while the existing phone system is available as a “safety net” backup for any potential glitch or surprise that might arise during the upgrade to a new and modern system. No one is proposing a “flash cut” in which the telephone network disappears overnight. This process will, in fact, probably take half a decade to complete.

To take the first step, the FCC should rely on a time-tested method: demonstration projects. Conducting demonstration trials in carefully selected markets in which existing POTS users are rapidly moved to Internet protocol-based networks will provide a controlled environment for an accelerated transition with the existing telephone network still in place as a safety net.

This approach gives consumers an assurance that if any unexpected problems causing consumer disruptions arise, service can continue over the telephone network while technical and service issues are resolved. Through the demonstration projects, we can determine what is likely to go wrong and have solutions in place prior to a broader national transition.

The FCC has a recent successful precedent for taking precisely this step. In the nation’s transition from analog to digital television broadcasting, the FCC conducted a similar test. Leading up to the digital TV conversion, some warned of potential negative consequences for consumers. The warnings were similar to those we are hearing about the transition from POTS to modern networks. In particular, the articulated fear was that switching to digital television broadcasts would harm consumers, particularly the elderly and less technically savvy viewers who decide to keep their older analog television sets but would experience difficulty installing the required converter box to receive and convert the new digital broadcasts. The circumstance of rural and lower income viewers was a particular focus. To address these concerns, the FCC launched a demonstration project in Wilmington, N.C., an area with a wide diversity of viewers, including those with low incomes, the elderly, and viewers living in both metropolitan and rural areas.

The FCC’s Wilmington demonstration project proved a success. It provided clear evidence that on the day analog broadcasts ended, viewers were prepared. There were almost no complaints. Analog television users across the Wilmington region had successfully installed digital-to- analog converter boxes. The trial inspired confidence that the national transition could proceed uneventfully, and on national transition day, very few problems were encountered.

Employing the same model, the FCC should now move quickly to authorize closely supervised demonstration projects in selected markets, perhaps one urban and one rural, where people quickly shift from existing telephone networks to modern broadband networks. The demonstration projects offer a test bed to guarantee that core consumer values will be protected, to learn what may go wrong in a controlled rapid transition and to devise solutions for problems that in fact arise prior to a broader national transition.

While the attraction of broadband networks has propelled a POTS-to-broadband transition that is now well advanced, we owe it to ourselves to plan and complete it on the schedule that the FCC’s Advisory Council recommended. Applying the knowledge gained through demonstration projects we can accelerate the POTS phase-out and realize the benefits of greater network functionality, a broader array of services for consumers and the economic efficiencies that come from devoting investment to the networks of the future rather than the network of the past.

Public-Private Partnership Needed for New Road Map

For the moment we have the luxury of time to conduct demonstration projects, but an additional sense of urgency for action is now apparent. The current telephone network is supported by antiquated equipment, and as consumers have continued their ongoing migration to the new networks, equipment providers either no longer manufacture or have significantly scaled back production of the TDM (time-division multiplexing)-based equipment necessary to maintain and operate the POTS network. As fewer replacement parts become available, maintaining the phone network grows dramatically more expensive, further skewing the ratio between investment in old and new technologies, with the ever-escalating costs being passed on to consumers. All Americans stand to benefit from shifting investment to modern networks that offer consumers service as least as good as what they enjoy today, as well as the greater functionality that broadband networks can offer.

A public-private partnership among all stakeholders—consumers, telecom companies, suppliers, and regulators—will be needed to establish the rules of the road for the new network. These stakeholders can embrace key principles—recently outlined by the leading consumer advocacy organization Public Knowledge—service for all, competition, reliability, consumer protection, and public safety.

Simply providing access to new technology while protecting core consumer values, however, isn’t the whole job. We also must boost adoption rates, educating every American about what the transition means, how it will affect them and how by using broadband they can improve opportunities for themselves and their families. We can’t afford to leave any American in the dark about the value of broadband; we can’t leave anyone behind.

So the real questions surrounding the IP transition are not whether, but when; not if, but how. Bipartisan support exists in Congress for the transition itself and for the basic principles that should be at its core, including consumer protection, universal service, network reliability, competition and public safety. Now is the time for all stakeholders to work together, starting with the demonstration projects, to ensure that the transition’s rapid final phase proceeds as smoothly as possible.

New FCC Chairman Embraces Need for Quick Action

The Internet’s evolution has brought us to another critical juncture in communications policy as we consider how to complete the transition from the bygone era of plain old telephone service to the broadband future of the 21st century. It’s a critical transition, given broadband’s increasingly dominant role in every part of our economy, as well as its ability to improve lives and advance economic growth. It’s also something that just about every stakeholder, including the FCC, regards as inevitable.

In 2011, the Technological Advisory Council led by now-FCC chairman, Tom Wheeler, noted that “[t]he FCC should take steps to prepare for the inevitable transition” from the old network and in fact “take steps to expedite the transition, with a target date of 2018,” including the need to “re-align regulatory requirements to emerging technologies.”

The recommendation reflected vision and foresight then, and provides an ambitious but achievable agenda now. When it’s achieved, Americans will have access to reliable networks designed specifically for broadband voice, video, and Internet services, rather than antiquated networks that support phones wired to the wall. Every app, every smartphone and tablet, every desktop computer will smoothly connect consumers to the online experience of their choice—telemedicine services for better health, virtual classrooms for lifetime learning, their legislators’ offices for civic engagement, a job opportunity, a business contact, a sporting event, a movie, friends and family across town or on the other side of the world. That’s the goal—delivering the services consumers want. Upgrading and modernizing our 20th century telephone networks will get us there.

This goal now appears closer on the horizon than ever before. In one of his first official acts, Chairman Wheeler has made clear the need to speed the “Fourth Network Revolution,” recognizing how “new networks catalyze innovation, investment, ideas and ingenuity.” He stated that “the time to act starts now” and proposed a timetable for FCC action in January 2014 on how to “begin a diverse set of experiments that will allow the commission and the public to observe the impact on consumers and businesses of the [IP transition and proposed demonstration projects].” In setting this course, the new chairman has jump-started the process and appears ready to steer the FCC toward addressing the key policy, technical, and consumer issues necessary to bring 21st century high-speed broadband to more Americans.

In our land of opportunity and innovation, we’re a place of relentless creativity. At the core of our success is an entrepreneurial culture powered by private sector investment. In that American tradition, it’s incumbent on us to ensure that the benefits and opportunities of next-generation networks and services become widespread and available to all. The POTS-to-broadband transition will free the needed investment. The next steps for us to take are now clear.

Reproduced with Permission from The Telecommunications Law Resource Center, Copyright 2013, The Bureau of National Affairs, Inc. (800-372-1033)www.bna.com.

A new report from Bret Swanson of Entropy Economics (Swanson is also one of our Broadband Ambassadors) looks at the current state of competition in the online space and what that competition means for regulations. Titled “Digital Dynamism: Competition in the Internet Ecosystem,” the report is a lean 20 pages but packed with some startling facts and figures. Some examples:

• Private sector investment in high-speed Internet over the past 15 years amounts to $1.2 trillion.

• As a result of that investment, competition is strong and the U.S. broadband networks rank high globally when it comes to speed, and only South Korea generates more traffic than Americans.

• Due to how dynamic and unpredictable the industry is, top-down regulatory oversight is a major challenge, which highlights the need for a new approach from regulators.

Swanson’s paper also contains a graphic breaking down all the ways communication has changed since 1984. The full graphic is available here, but the image above is worth highlighting. Remember when communication meant phone-to-phone? Well things have certainly changed…

Earlier today, we held a Twitterview with Wear the Cape, an innovative company focused on inspiring goodness in others through clothing. You can check out the condensed interview via our respective Twitter handles (@iiabroadband, @WtCKids). Here’s the extended interview — IIA.

What is Wear the Cape and what is its mission?

Wear the Cape is dedicated to restoring the power of kindness and good character through hip, inspirational products that create teachable moments and via our non-profit arm the kidkind foundation.

October is National Bullying Prevention Month. How does cyberbullying fit into Wear the Cape’s efforts?

Wear the Cape is focused on preventing bullying by shaping behavior from an early age – kids aren’t born bullies. But cyberbullying is a pervasive issue, particularly among teens. We aim to show teens that giving respect, gets respect – your peers don’t look up to you for mistreating others.

How does Wear the Cape interact with its customers and supporters online?

Wear the Cape utilizes its website to accept donations (100% to the kidkind foundation), sell products (10% of proceeds goes directly to the kidkind foundation, with the remained going toward developing educational materials and furthering the mission), and address issues that families care about via our blog. We’re also active on social media!

Is Wear the Cape dependent on high-speed broadband Internet for building, developing, transforming and/or growing the brand and kidkind foundation?

So far, Wear the Cape is — for the most part –— an online-only organization. Our website is a platform for e-commerce, and we also use it to accept donations. Without fast Internet speeds, consumers would not be able to easily and reliably purchase Wear the Cape clothing and gear or make contributions to the kidkind foundation.

What are some of the web applications that have enabled Wear the Cape’s team to run the business and non-profit arm?

We use WordPress as our blogging platform and Shopify to sell our products and take donations for the kidkind foundation. These two gems enabled us to launch, and Wear the Cape depends on them every day!

How would lack of broadband build-out across the nation affect Wear the Cape’s business model?

People that don’t have broadband are much less active on social media and usually don’t shop online. Wear the Cape relies on social media to help reach people far and wide with our mission, and most of our product sales currently take place at our online storefront. It’s difficult for us to reach and help communities without high-speed Internet.

How can the online users connect with Wear the Cape?

Visit us at our website, and follow us on Twitter, Facebook, Tumblr, Pinterest and LinkedIn! We would love to hear from you.

“Google’s real innovation was to tunnel under the regulatory morass that inhibits physical broadband deployment. Why is Google introducing Google Fiber in Kansas City and not its native California? Google’s own Milo Medin has explained repeatedly that regulatory brambles make California ‘prohibitively expensive.’”

Jenkins turns to the FCC’s failure to launch reasonable proposals to allow carriers to shift investment from older technologies carrying increasingly less traffic, to newer technologies carrying an exponentially growing volume of voice, video and data. The need for modernizing our regulations becomes even more critical when one reads a study authored by Dr. Anna-Maria Kovacs, a visiting scholar at Georgetown’s Center for Business and Public Policy. Dr. Kovacs’ analysis estimated that incumbents telcos spent a total of $154 billion on their communications networks, with more than half maintaining fading legacy networks that carry less than 1 percent of all data.

While so much else is crippled by Washington paralysis, broadband deployment should be freed.

There are 3.79 million square miles in the United States, and the federal government controls 30 percent of that land. This vast swathe of federally controlled land is roughly equivalent to the combined size of Alaska, California, Texas and Montana.

So when a White House task force unveils a guide that lays out the best practices for “dig once,” a program aimed to cut the costs of deploying high-speed broadband along federal roadways by as much as 90 percent in certain areas, it’s big news.

This week, the White House Office of Science and Technology Policy (OSTP) released its latest progress report in response to President Obama’s 2012 Executive Order aimed at accelerating broadband deployment on federally-owned property by making the deployment and construction process cheaper and more efficient. Yesterday’s White House action offers a clear cut example of how government can spur greater and more affordable opportunities for high speed broadband deployment.

Access to and the use of high-speed broadband networks and services are critical to sustaining economic growth. The benefits of broadband-based services and websites have increased the nation’s global competitiveness, allowed small businesses to grow and enter new markets, and helped create many new high-paying jobs. President Obama has pushed to bring state-of-the-art communications networks to unserved and underserved communities. He has also sought to expand access to modern broadband networks by providing incentives for private sector investment designed to support new infrastructure deployment.

The White House announcement highlights several steps that will help reduce barriers to private sector broadband deployment, including an advanced mapping program that offers real-time guidance to identify the most efficient wired and wireless broadband deployment locations on federal land. This tool will also help accelerate high-speed broadband deployment by providing industry with real-time information regarding streets that are currently under construction and thus easier to access.

Yesterday’s action includes the creation of a “one-stop shop” for permit forms, lease agreements, and other legal forms to help reduce the significant legal and regulatory costs often associated with deployment of high speed broadband infrastructure. This convenience should create further efficiencies as it will facilitate deployment approvals, particularly when broadband deployment permitting involves multiple Federal and state agencies.

OSTP estimates that these regulatory tools “can reduce network deployment costs along Federal roadways by up to 90 percent.

While the programs OSTP announced this week offer nationwide benefits, rural America, which has trailed in receiving the best broadband access, may benefit most of all. High-speed broadband is increasingly important to farming communities (see here and here). Faster and more affordable broadband enables greater access to e-learning and e-Health opportunities that level the playing field between citizens in cities and those living in rural areas.

Cheaper and more accessible high-speed broadband promises stunning social and economic benefits. It can make better healthcare more accessible and more affordable for those who cannot travel. It facilitates a host of online education options, which may make advanced learning more feasible and affordable for many Americans. Consider for example, a master’s degree in computer science from a respected university for about $7,000!

In short, faster and better high-speed broadband is a necessary step to creating jobs and opportunity at all levels of the economy, and increasing the speed and efficiency at which these networks can be constructed is vital to our nation’s success. Here’s to the Administration for recognizing these realities and taking common-sense steps to provide the tools and guides needed to bring broadband to more Americans. Congratulations and keep up the good work!

When NASA’s Lunar Laser Communication Demonstration (LLCD) begins operation aboard the Lunar Atmosphere and Dust Environment Explorer (LADEE) mission managed by NASA’s Ames Research Center in Moffett Field, Calif., it will attempt to show two-way laser communication beyond Earth is possible, expanding the possibility of transmitting huge amounts of data. This new ability could one day allow for 3-D High Definition video transmissions in deep space to become routine.

“The goal of the LLCD experiment is to validate and build confidence in this technology so that future missions will consider using it,” said Don Cornwell, LLCD manager. “This unique ability developed by MIT (Massachusetts Institute of Technology Lincoln Laboratory), has incredible application possibilities and we are very excited to get this instrument off the ground.”

LLCD’s main mission objective is to transmit hundreds of millions of bits of data per second from the moon to Earth. This is equivalent to transmitting more than 100 HD television channels simultaneously. LLCD receiving capability will also be tested as tens of millions of bits per second are sent from Earth to the spacecraft. These demonstrations will prove the technology for increased bandwidth for future missions is possible.

70%, which is the number of American adults who now have high-speed Internet at home, according to the latest numbers from Pew. That’s an increase of 4% from a year ago.

As for lingering barriers to broadband adoption, Pew finds:

The demographic factors most correlated with home broadband adoption continue to be educational attainment, age, and household income. Almost nine in ten college graduates have high-speed internet at home, compared with just 37% of adults who have not completed high school. Similarly, adults under age 50 are more likely than older adults to have broadband at home, and those living in households earning at least $50,000 per year are more likely to have home broadband than those at lower income levels.

Policy implication? We must continue encouraging investment in broadband networks.

Be careful where you swing the regulatory hammer, or you might kneecap an entire industry.

That’s just one of the takeaways from a must-read an op-ed in Roll Call penned by Martin H. Thelle and Bruno Basalisco of Copenhagen Economics. Titled “Europe’s Internet Handcuffs Show U.S. How Not to Regulate,” the piece makes a strong case against miring America’s broadband industry in the regulatory muck.

If you’re looking for the duo’s argument in a nutshell, it can be found in the third paragraph:

Since the late 1990s, the U.S. and the European Union have taken two very different paths on broadband policy. While the U.S. has focused on infrastructure-based competition, the EU has forced service-based competition through government regulation, with the primary objective of lowering prices.

According to Thelle and Basalisco, that focus on service-based competition has been near disastrous for the EU when it comes to investment in broadband. How disastrous? Try this on for size:

As with any communications service, investment in infrastructure is needed to provide consumers with the quality services they demand. A decade after unbundling in Europe, per capita investment in telecommunications infrastructure now lags the U.S. by more than 50 percent.

Now that’s a regulatory knee-capping — so much so that Thelle and Basalisco are genuinely surprised that some here in the States want to take a page out of the EU’s model. As they write:

Clearly, the cautious U.S. decision to refrain from applying EU-style unbundling on providers has spurred competition and investment in the American broadband market, thus enabling huge advances in Internet technology. Reversing that decision would risk hindering further advancements in all services using broadband infrastructure.

Heading down a path of EU-style, interventionist broadband regulation could severely harm U.S. investments in necessary communications infrastructure, darkening U.S. competitiveness globally.

That right there is what those of us against leveling more regulations on the broadband industry have been arguing all along. Even from across the Atlantic, Thelle and Basalisco recognize that the U.S. model is working quite well. The question is, will regulators here recognize the EU’s model isn’t working well at all?

The phenomenon of people “cutting the cord” is about more than people choosing wireless and Internet-based technology instead of traditional phone service. Cable is also feeling the effect, with services like Netflix, iTunes, and Amazon Prime plucking consumers away. Case in point: Gerry Smith of The Huffington Post, who writes about his experience with a new service called Aereo aimed at providing consumers with a new way to watch broadcast television:

For me, Aereo has been a welcome addition to the patchwork of services my wife and I use to watch our favorite shows and live sports.

We are two of the “cable cutters” you hear about—youngish residents of big cities who don’t have cable. We don’t want to pay an expensive monthly bill and don’t want to be tempted to watch hours of mindless television.

For $8 a month, we’ve been able to watch live golf tournaments and basketball games and record up to 20 hours of programs when we’re not home. To watch must-see shows we can’t get on Aereo, like “Mad Men,” “Breaking Bad” and old episodes of “Friday Night Lights,” we use iTunes and Netflix.

Smith notes that while Aereo is facing a flurry of lawsuits from content providers, the service still plans to expand to 22 cities over the next year. Stay tuned…

That’s the conclusion Ev Ehrlich, former undersecretary of commerce for the Clinton administration, comes to in an op-ed for the Wall Street Journal [LINK] Calling his piece “The Myth of America’s Inferior Broadband,” Ehrlich takes a direct shot across the bow of those calling for heavy-handed regulations in the U.S broadband industry. And he relies on facts rather than rhetoric to do it.

On the oft-cited global broadband ranking, Ehrlich writes:

The Internet company Akamai, which produces international speed rankings, has the U.S. currently at No. 9, up from No. 22 in 2009—faster than in France, Germany and Britain. A recent report by the Information Technology and Innovation Foundation notes that the U.S. has the second-lowest entry-level broadband prices (behind Israel) in the Organization for Economic Cooperation and Development, despite ranking No. 27 among OECD countries in population density, a key driver of cost.

A jump from #22 to #9 in just four years is a success, any way you slice it. Especially given the state of the economy during that same stretch. And a big reason for that success, Erhlich notes, is the $250 billion U.S. broadband companies have invested in networks since the global recession started in 2008. How does that match up to other countries? According to Ehrlich, quite well:

Compare this with Europe, where in most countries Internet service providers lease aging wires from incumbent, often state-sanctioned telephone companies. This may have created instant infrastructure for Europe, but because the ISPs do not own the underlying infrastructure, they have no incentive to invest in it. The incumbent phone companies, in turn, are often directly or indirectly subsidized heavily by taxpayers.

There’s much more in Ehrlich’s piece, but I’ve already used my allotment of block quotes, so head on over to the Wall Street Journal and read his full op-ed. SPOILER ALERT! Anyone hoping America embrace European-style regulations of the broadband industry are going to be a bit shocked.

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